We recently compiled a list of the 10 Best Low Volatility Stocks to Invest in Now. In this article, we are going to take a look at where Thermo Fisher Scientific Inc. (NYSE:TMO) stands against the other low volatility stocks. We will also discuss the latest updates around the market and political situation of the US.
Market Begins November on a Dynamic Note
The first week of November has been quite eventful so far. Presidential candidate Donald Trump won the election and President Joe Biden, speaking from the Rose Garden after the election, pledged a peaceful transition of power on January 20.
Moreover, Federal Reserve Chair Jerome Powell announced a quarter-point rate cut on November 7, aimed at supporting strong employment and steady inflation. Economic indicators show solid growth, with GDP rising by 2.8% in the third quarter and consumer spending remaining strong. While the housing sector remains weak, other areas like equipment investment have strengthened.
The labor market shows resilience despite a slowdown in job gains and an uptick in the unemployment rate to 4.1%. Inflation has cooled significantly, nearing the Fed’s 2% target. However, core inflation remains slightly above that level.
In response to questions, Chair Powell noted that the U.S. election isn’t expected to influence near-term Fed policy, as future policy changes and their economic effects remain uncertain. He acknowledged that higher Treasury yields likely reflect expectations of stronger economic growth rather than inflation concerns.
Looking ahead to December, Powell stated that the Fed will assess data on inflation, employment, and economic growth to determine if further policy recalibration is needed. He emphasized the Fed’s effort to balance rate adjustments to avoid moving too quickly or too slowly, aiming to sustain a strong labor market while bringing inflation closer to the 2% target.
The market is taking the news well and all three major market indices closed at all-time highs on November 7. While things seem to be on track, it is important to note that such events sometimes also bring volatility and uncertainty.
Read Also: 10 Best Stocks Under $100 To Invest In and 10 Best Stocks to Buy and Hold For 5 Years.
Economic Outlook in an Era of Unpredictable Policies
In a recent interview on CNBC’s Squawk Box, Former Federal Reserve Vice Chairman Roger Ferguson discussed the complexities surrounding recent economic and policy changes. Ferguson noted that the Federal Reserve’s approach remains cautious, taking a “wait-and-see” stance to assess how policies impact the economy.
He mentioned Fed Chair Powell’s resistance to providing overly specific future guidance and instead emphasized data-based decisions. Additionally, Ferguson highlighted that external factors such as tariffs and changes in the energy market could create varied inflationary pressures. While deregulation might counterbalance some inflation risks, tariffs could still add complexity.
The conversation touched on the “neutral rate,” with Ferguson indicating that it will play a crucial role moving forward, especially given shifts in bond yields and their impact on inflation expectations. Ferguson conveyed that uncertainty in policy directions requires flexibility in economic responses, with ongoing adjustments as more details unfold.
Our Methodology
For this article, we used the Yahoo Finance stock screener to identify around 250 large to mega-cap stocks with a 5-year beta (monthly) between 0.2 and 0.8. We narrowed our list to 10 stocks most widely held by institutional investors and listed them in ascending order of their hedge fund sentiment. The hedge fund sentiment was taken from Insider Monkey’s Q2 database of over 900 elite hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A workstation in a research lab stocked with laboratory products and services.
Thermo Fisher Scientific Inc. (NYSE:TMO)
Number of Hedge Fund Holders: 108
5-year Beta (Monthly): 0.78
Thermo Fisher Scientific Inc. (NYSE:TMO) offers a range of products and services in life sciences solutions, analytical instruments, specialty diagnostics, and laboratory products, catering to various markets worldwide.
Thermo Fisher (NYSE:TMO) reported mixed earnings on October 24, with EPS of $5.28 slightly exceeding the estimates but revenue of $10.6 billion lagged the forecasts by $30 million. The company raised its full-year EPS guidance to a range of $21.35 to $22.07, compared to the prior outlook of $21.29 to $22.07. The company’s revenue guidance remained unchanged between the range of $42.4 billion to $43.3 billion.
Despite mixed results, analysts view the stock in a positive light. As reported by TipRanks on October 25, Morgan Stanley’s Tejas Savant kept a Buy rating on Thermo Fisher (NYSE:TMO) with a $670 price target based on the company’s steady third-quarter performance, with organizational revenue growing sequentially for three quarters despite pandemic challenges.
Adjusted EPS also exceeded expectations, aided by strong cost control and reduced interest expenses. Strategic investments are boosting productivity, and the company’s cautious management of market challenges suggests a promising trajectory through 2025, despite some uncertainty in the broader market.
Moreover, on October 24, The Fly reported that RBC Capital maintained an Outperform rating on the company stock but reduced the company’s price target from $767 to $718. The firm found the insights from the company’s Q3 earnings call to be more optimistic than the actual results. It continues to have a favorable view of the stock and noted that the Life Sciences Solutions segment is experiencing positive momentum in bioproduction. Additionally, sales in the Laboratory Products and Biopharma Services segments are not showing signs of a slowdown in the biotech industry, according to the analyst’s commentary to investors.
Overall TMO ranks 2nd on our list of the best low volatility stocks to invest in now. While we acknowledge the potential of TMO as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than TMO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.